Stable money measurement, Financial Management

Assignment Help:

Stable Money Measurement

A business entity enters within numerous transactions in which affect the business in varied ways.  Therefore recording, classification and summarization of these heterogeneous business transactions are measured and expressed in terms of general unit of measurement. For accounting reasons we suppose that money serves as a common denomination for expressing business transactions.  The implication of this concept is in which those transactions and events that might affect the business but are not measurable in money terms are not recorded in the books of account.

The second aspect of this concept is in which the money gives a standard of exchangeability and implicit assumption is in which the changes in purchasing power of the monetary unit are not of enough importance as to need adjustments. The application of the second aspect is in which all the assets in the balance sheet are recorded at their historical cost not at the current price. The changes in the purchasing power of monetary units are because of the inflation, but for accounting purpose it are ignored; therefore the concept is called as Stable Money Measurement Concept.


Related Discussions:- Stable money measurement

Theoretical spot rates, The theoretical spot rates for treasury secur...

The theoretical spot rates for treasury securities represent the appropriate set of interest rates that should be used to value the risk from default-free cash fl

Types of companies likely to have high operating leverage, Give two example...

Give two examples of types of companies likely to have high operating leverage.Find examples other than those cited in the chapter. Long distance electricity generating compani

Portfolio classification of mutual funds, Portfolio Classification of Mutua...

Portfolio Classification of Mutual Funds Mutual Funds differ with reference to the type of instruments in which the money has been invested as per the requirements of the inves

Explain the reconstruction and effect on share price, Reconstruction and ef...

Reconstruction and effect on share price A listed company facing reconstruction (divestment, demerger, MBO etc) will have informed the stock market in advance and the share pri

How do financial managers calculate the average tax rate, How do financial ...

How do financial managers calculate the average tax rate? Financial managers calculate the average tax rate by dividing tax dollars paid by earnings before taxes (EBT).

Accounting framework - convention of conservation, Accounting Framework - C...

Accounting Framework - Convention of Conservation Conservatism refers to the principle and practices that are established through way of tradition, reluctance to change from e

Benefits of interest rate swaps, Q. Benefits of Interest rate swaps? I...

Q. Benefits of Interest rate swaps? Interest rate swaps may provide several benefits to companies including: - The ability to get finance at a cheaper cost than would be p

Weighted average cost of capital or composite, Q. What is denoted by weight...

Q. What is denoted by weighted average cost of capital OR Composite? How is it calculated? Exemplify with an example. Ans. Weighted Average Cost of Capital: - Capital formation

Section C, Honey Well company is contemplating to liberalize its collectio...

Honey Well company is contemplating to liberalize its collection effort. It''s present sales are 1000000 and it''s average collection period is 30 days, it''s expected variable c

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd